Question

Depreciation is a process by which: A. replacement funds are accumulated for plant and equipment B. the decline in market value of plant and equipment is determined and recorded C. the cost of plant and equipment is allocated to expense over its useful life D. the difference between current market value and historical cost of plant and equipment is recorded.

Answer 1

C. The cost of plant and equipment is allocated to expense over its useful life.

Step-by-step explanation:

Depreciation is defined as the fall in value of an asset; how an asset value declines or falls overtime. Causes of depreciation are wear and tear, obsolescence etc.

Depreciation is also a process, where the cost of assets(plants, equipments and machineries) are allocated to expense over their useful life. It is computed as ; cost minus scrap value divided by lifetime [ (Cost - Scrap value)] /life time